FRANCE Trends and Developments Contributed by: Xavier Pernot, Pierre Linais and Pauline Vitte, Jeantet
• Article 1254 prohibits insurance coverage against sanctions for lucrative misconduct, thereby rein- forcing its deterrent effect and ensuring wrongdo- ers bear the financial consequences directly. However, some authors are not convinced by this pro- hibition: lucrative misconduct requires an intentional fault, meaning that it must have been deliberately committed with a view to obtaining an undue gain or saving. In this context, one can wonder whether it is not necessarily uninsurable, as insurance covers events that are random. Practical implications and effectiveness Effectiveness Multiple concerns about the effectiveness of Article 1254 have been expressed. The civil sanctions are imposed upon request and are reserved to the public prosecutor. In this context, it is plausible that they will only be set in motion in rare high-profile trials, and might render Article 1254 less effective in practice for at least two reasons: • the public prosecutor will not be aware of every dispute, especially if the lucrative misconduct is based on a contractual breach; and • the public prosecutor will not necessarily have the availability needed to intervene in trials and request condemnation to a civil penalty. The amount that the wrongdoer will be ordered to pay is assessed based on the profit obtained from its lucrative misconduct. However, it is possible that lucrative misconduct without generating significant profits may still constitute a serious breach in that it endangers others. In that case, the low profit obtained by the person who committed the breach will cap the amount of the civil penalty.
Deterrence Article 1254 aims to dissuade economic actors from disregarding the law to optimise gain by imposing a sanction that deprives them of their gain. However, one can wonder whether Article 1254 will be able to meet that purpose, because those who derive profits from lucrative misconduct would neces- sarily be individuals and not legal entities, as there is no lucrative misconduct without human intelligence; the deterrence of Article 1254 can only be effective if individuals are involved, and not only legal entities. Moreover, based on comparative law, certain authors consider that the deterrent effect is more impactful in countries where punitive damages are allowed. As the French legal system is reluctant regarding punitive damages, the choice has been made to consider the sanction as a civil penalty. Conclusion The recognition of profitable misconduct in the Civil Code has been celebrated by many, for the following reasons: • it demonstrates that the French legislator has understood the logic of profitable misconduct; and • it represents a victory for French legal doctrine, which strongly advocated for this characterisation to be recognised in certain civil disputes, although it was never adopted by case law. Article 1254 represents a significant evolution in French civil liability law. The introduction of profitable misconduct and its confiscatory sanction into the Civil Code marks a significant departure from civil liability law, which has traditionally been centred on damage reparation. Only the future will tell whether this recognition will significantly impact France’s legal attractiveness and prove effective, depending on how courts and pros- ecutors take hold of this article, and on judicial inter- pretation and enforcement practices.
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